I guess you didn't go through their financials. You do realize they can cut expenses like R&D, SGA, etc, and probably not affect their revenues immediately. To me, they are like YHOO, where they have a bunch of people using the products through sheer inertia. YHOO in the past few years has been doing exactly that, which is cut costs relative to their revenues, and shown a decent profit, without affecting their income drastically.
ZNGA could do the same thing. They could cut R&D by 1/3, SG&A by 2/3, and even cut down on things like customer support, etc, and their current earnings for at least a few quarters wouldn't be affected immediately. They still need to create new games to entice those same users
I didn't because I thought you had some inside knowledge on the situation and that you might share it. They were questions of the non-rhetorical type.
>They could cut R&D by 1/3, SG&A by 2/3, and even cut down on things like customer support, etc //
Sounds great. When you say SGA, isn't that mainly wages. So, lay off most of their staff, do away with a large part of development and still generate the same earnings. Won't that just cause them to fail slowly?
I can see how Yahoo can coast on inertia to some extent but aren't Zynga more reliant on novelty? Yes new people come along, but they're entering - in social gaming terms - a pool of people who've already tired of a particular game/games.
Did you miss the bit where they use $400M to generate that gross revenue?
How do you think they're going to save > $10M per month to put themselves in to decent profit? Which costs will they cut?